The Growing Movement for Publicly Owned Banks

[puntnomads]

We the people have given away our sovereign money-creating power to private, for-profit lending institutions, which have used it to siphon wealth from the productive economy. Some states are moving to take that power back.

 

 

“Hundreds of job-creating projects are still on hold because Michigan businesses and entrepreneurs cannot get bank financing. We can break the credit crunch and beat Wall Street at their own game by keeping our money right here in Michigan and investing it to retool our economy and create jobs.”

 

Lansing Mayor Virg Bernero in The Detroit News March 9, 2010

 

Michigan, which has an unemployment rate of 14 percent, has been particularly hard hit by the economic downturn. Virg Bernero, mayor of Lansing, the state’s capital, and a leading Democratic candidate for governor, proposes to relieve the state’s economic ills by opening a state-owned bank. He says the bank could protect consumers by making low-interest loans to those most in need, including students and small businesses; it could also help community banks by buying mortgages off their books and working with them to fund development projects.

 

Bernero joins a growing list of candidates proposing this sensible solution to their states’ fiscal ills. Local economies have collapsed because of the Wall Street credit freeze. To reinvigorate local business, Main Street needs a heavy infusion of credit, and publicly-owned banks could fill that need.

 

In a recent article for YES! Magazine, I tracked candidates in five states running on a state bank platform and one state (Massachusetts) with a bill pending. Just one month later, there are now three more bills on the rolls—in Washington State, Illinois and Michigan—and two more candidates joining the list of proponents (joining Bernero is Gaelan Brown of Vermont). That brings the total to seven candidates in as many states (Florida, Oregon, Illinois, California, Washington State, Vermont, and Idaho) campaigning for state-owned banks, including three Democrats, two Greens, one Republican, and one Independent.

 

The Independent, Vermont’s Gaelan Brown, says on his website, “Washington, D.C. has lost all moral authority over Vermont.” He adds, "Vermont should explore creating a State-owned bank that would work with private VT-based banks, to insulate VT from Wall Street corruption, and to increase investment capital for VT businesses, modeled after the very successful state-owned Bank of North Dakota."

 

Michigan, which has an unemployment rate of 14 percent, has been particularly hard hit by the economic downturn. Virg Bernero, mayor of Lansing, the state’s capital, and a leading Democratic candidate for governor, proposes to relieve the state’s economic ills by opening a state-owned bank. He says the bank could protect consumers by making low-interest loans to those most in need, including students and small businesses; it could also help community banks by buying mortgages off their books and working with them to fund development projects.

 

Bernero joins a growing list of candidates proposing this sensible solution to their states’ fiscal ills. Local economies have collapsed because of the Wall Street credit freeze. To reinvigorate local business, Main Street needs a heavy infusion of credit, and publicly-owned banks could fill that need.

 

In a recent article for YES! Magazine, I tracked candidates in five states running on a state bank platform and one state (Massachusetts) with a bill pending. Just one month later, there are now three more bills on the rolls—in Washington State, Illinois and Michigan—and two more candidates joining the list of proponents (joining Bernero is Gaelan Brown of Vermont). That brings the total to seven candidates in as many states (Florida, Oregon, Illinois, California, Washington State, Vermont, and Idaho) campaigning for state-owned banks, including three Democrats, two Greens, one Republican, and one Independent.

 

The Independent, Vermont’s Gaelan Brown, says on his website, “Washington, D.C. has lost all moral authority over Vermont.” He adds, "Vermont should explore creating a State-owned bank that would work with private VT-based banks, to insulate VT from Wall Street corruption, and to increase investment capital for VT businesses, modeled after the very successful state-owned Bank of North Dakota."

 

The True Potential of Publicly-owned Banks

 

North Dakota broke new ground nearly a century ago, but the true potential of publicly owned banks remains to be explored. Nearly all of our money today is created by banks when they extend loans. (See the Chicago Federal Reserve’s “Modern Money Mechanics," which begins, “The actual process of money creation takes place primarily in banks.”) We the people have given away our sovereign money-creating power to private, for-profit lending institutions, which have used it to siphon wealth from the productive economy. If we were to take that power back, we could generate the credit we need to underwrite a whole cornucopia of projects that we don’t even consider because we think we lack the “money.” We have the labor and we have the materials; we just lack the “liquidity” necessary to put them together to create products and services.

 

Money today is just a ticket, a receipt for work performed and goods delivered. We can fund the work we need done by creating our own credit. The real promise of publicly-owned banks is not that they can bail out subprime borrowers but that they can jumpstart the economy by creating real wealth. They can provide the liquidity to put labor and materials together, allowing the economy to build and grow. Our private, profit-driven banking sector has been bleeding wealth from the rest of the economy. Public-interest banks can transfuse the economy with the credit it needs to flourish and be productive once again.

 

http://www.yesmagazine.org/new-economy/the-growing-movement-for-publicly-owned-banks